GDT Logs Biggest Gain in Months
December 1, 2020
Today’s Global Dairy Trade (GDT) index climbed 4.3% to $3,261/metric ton, its strongest spike since July 7. Prices on all products moved higher. The strong advances made by butter and skim milk powder (SMP) could prove to be especially good news for U.S. dairy producers in markets with heavy Class IV production.
Increases in the price of both fat and skim milk products drove today’s index upward. The average price for whole milk powder (WMP), which accounted for more than half of today’s sales volume, jumped 5%, also the largest increase since July 7. Today’s GDT SMP price increased 3.6% to the equivalent of a nonfat dry milk (NDM) price at $1.31/lb. after adjusting for protein. SMP volume was also strong, accounting for nearly a quarter of all sales. The GDT butter price advanced 3.8% to $3,986/metric ton, equivalent to a U.S. price of $1.76/lb., adjusted to 80% butterfat. Unlike SMP prices, butter vales have been rising since the Sept. 15 low. Butter prices for contracts through late March were up more than 4% today.
Lactose climbed a startling 13.5%, its first increase at the GDT since early September. However, today’s surge represented only a partial rebound from the previous auction’s 18% decline.
CME dairy futures markets reacted with enthusiasm to today’s GDT news. First quarter Class IV contracts gained more than 50¢, while most 2021 butter contracts added between 3.5¢ and 6¢. NDM futures also settled higher. CME spot butter jumped 4.75¢ to $1.41, while NDM climbed 3.5¢ to $1.145, its highest value since February, before the pandemic weighed on Class IV markets.
Despite these gains, both spot butter and NDM remain well below today’s GDT values. Rising global prices and a weak dollar are making U.S. dairy exports increasingly attractive to importers. As demand rises globally, as evidenced both by today’s sharp GDT price advances and recent strong demand from China, U.S. exporters could begin to move larger shipments overseas, which could offer a lift to U.S. dairy product values, especially milk and whey powders.